Sell everything (except the dollar)!
A look at the day ahead in markets from Dhara Ranasinghe. When the blue-chip Dow Jones index slides more than 1,000 points on one day, U.S. Treasury yields jump as much as 20 basis points and Britain's pound drops more than 2%, you'd be forgiven for thinking that investors have gone into a sell everything mode.
But with the safe-haven dollar at 20-year highs, there was at least one asset benefiting from Thursday's market mayhem.
For sure, waters seem calmer as European trading gets underway, although Asia shares slumped overnight.
Having breathed a sigh of relief that the Federal Reserve didn't opt for a massive 75 bps rate hike at this week's meeting, in a change of mind investors fretted that aggressive rate hikes - like the 50 bps move the Fed delivered - could trigger a sharp economic slowdown or recession.
Adding to the volatility was a surge in U.S. real or inflation-adjusted bond yields, which rose to their highest since early 2020 US10YTIP=RR .
The Bank of England warning of recession risk and inflation rising above 10% only exacerbated concerns about the growth outlook, sparking the biggest one-day drop since March 2020 (and we all remember why that month stands out, right?)
Given that it's non-farm payrolls day in the United States, Friday's trading session may not bring a quiet end to the week.
Economists polled by Reuters predict the U.S. economy created a solid 391,000 new jobs in April, versus 431,000 a month earlier.
The unemployment rate is expected to fall to 3.5%, which would make a pre-pandemic low.
The jobs data, alongside next week's U.S. inflation data , should help frame the debate over the Fed policy outlook.
Key developments that should provide more direction to markets on Friday: - Tokyo consumer prices rise at fastest pace in 7 years - ECB must quickly raise key rates, says head of Germany's Ifo institute -
- Swedish Central Bank minutes - Federal Reserve Bank of New York President John Williams - U.S. non-farm payrolls - Brazil April CPI - European earnings: Adidas, IAG, Amadeus, Intesa San Paulo, Beazley - U.S. earnings: CIGNA, Goodyear
US non-farm payrolls Link
Reporting by Dhara Ranasinghe, editing by Karin Strohecker
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